While new Polish IT companies tended to keep to their fairly large domestic market, cloud models such as software as a service (SaaS) have made it easier than ever before to start looking abroad for new customers.
For years, European tech startups have had problems breaking out across their national borders and going international (with the odd notable exceptions). But being content with to just focus on their home market just does not work for a growing number of fledgling IT firms. In Poland, some nascent tech companies are increasingly looking to going global in an attempt to supplement their domestic investors with foreign money.
Some newer Polish companies looking to achieve global scale include Base (a CRM vendor), UXPin (a design tool), Landingi (a landing page creator), PressPad (digital publishing) and Brix.io (a Twitter bootstrap design tool).
Owing to their cloud-based approach, some of them already have an international user base. But getting foreign investment is quite something else, even when initiatives such as Innovation Nest try to assist in bringing companies and investors together.
"Foreign investment is vital if you aim to go global," says Lukasz Holeczek, the founder of Brix.io, a visual website editor which uses Twitter's Bootstrap front-end framework. "Right now, we are working on our own means, but we are planning to move to Silicon Valley in the future."
The company already has a global user base. "Since we started at the beginning of the year, we got more than 12.000 customers globally," he says. "They are mostly front end developers, working for companies ranging from small start-ups to large enterprises. In Poland, more than 60 percent of developers know Bootstrap, and in other countries that percentage is even higher."
Such ambition on going global is a fairly recent phenomenon among Polish startups. A few years ago, the Polish domestic market was considered large enough for most of them to do well enough. Some of the most successful tech companies in the past kept strictly to the home market. "They were simply content with the business they did in Poland," Holeczek says.
The change of heart is hard to explain as the domestic market in Poland, a country of 38 million people, is still large enough to support companies.
"I can totally understand they just want to focus on their home market, as there is a lot of money to be made here," says Ela Madej, a Polish serial entrepreneur and currently angel investor based in the US.
Less objective reasons, based on sentiment and ambition, also play a role. "Those that make a different choice don't do that just because of the money, but also because they want to play in the top league."
Most of the companies that choose to take the extra step are SaaS vendors, Madej says. They have more chance to gain foreign capital in the first place because their revenue models are relatively predictable, she says.
"The set of metrics is very standard which is well known across industries in B2B business," she says. "If a company is able to increase its monthly recurring revenue, you can quickly see how a company is doing."
That doesn't mean that it is a walk in the park for even the best companies to get an international break through. "You need a really good product, but you also need a really good salesforce," Madej says. It is especially the latter that sometimes poses problems. "There is great technical talent in Poland, and great design talent as well. But scaling a sales team is very difficult."
A common mistake she notices is that Polish companies tend to spend insufficient time on assessing lead quality, and often focus on the wrong leads. "One example is that companies erroneously invest into getting more traffic to their website," she says. "In reality, that additional traffic does not convert into paying accounts. Sometimes you need to cut out all the marketing expenses and do cold calling. It's crazy how much cold calling and CRM hacking goes on in the US."
Another common mistake, according to Madej, is under-pricing. "When you know you have a good product, you should price the hell out of it. Only then the numbers will add up nicely." Also at work is the second-hand-car mechanism: slap a price on a sales advert that is too low, and people might not show up to watch the car because they suspect there is definitely some hidden fault somewhere.
But going global doesn't mean the whole company is going to move, Holeczek says. "The main challenge for start-up companies in for example Silicon Valley is that they have neighbours such as Facebook, Google and Apple," he says.
"They tend to hire the best engineers in the area. In Poland, small companies still have access to almost the full talent pool, so our start-ups usually has better talent available than in the USA. For that reason, we would be more inclined to keep our R&D in Poland."